US ethics issues new rules for employees who own NFT


The US executive branch employees who own NFTs will be
required to disclose assets either hold for the investment of income worth more
than $1,000 or produce over $200 in investment income during the reporting
period.
According to the new legal advisory from the Office of
Government Ethics by Director, Emory A. Rounds III, NFT holders who work at the
office must disclose digital asset holdings for the ethical reasons.
“Public financial disclosure filers must report the purchase,
sale, or exchange of collectible NFTs or F-NFTs that are securities when the
value of the transaction is over $1,000.”It states.
The office is responsible for managing over 130 government organizations
and the White House’s executive branch employees. The recommendation for staff
members who submit public financial disclosures follows the peak of the NFT
market toward the start of 2022.
Notably, the new advisory highlights NFTs and fractional NFTs
as “virtual artwork, music, video files, trading cards, digital real estate or
items in a virtual world.”
The document explains that the assets that are held “solely
for personal, family, or household use are not held for investment or
production of income.” Other domestic items, including furniture, clothing, and
perishables bought for family use, are not reportable, as per earlier
statements from the office.
According to the new rules, filers must report NFTs even if
they are not “held for investment or the production of income,” and they
produced over $200 in investment income in the reporting period. This implies if
an employee buys an NFT for display but later sells it for more than $200, they
would be needed to report the NFT as a source of income.
In the advisory, it is mentioned that a seven-part test for
accessing whether an NFT is retained for personal use or investment purposes.
For example, the test inquires whether the NFT was purchased to a great extent for
its potential worth or personal or aesthetic reasons.
In July, the United States Office of Government Ethics chose to ban employees investing in crypto to deal with crypto-related guidelines and policies.

Joyashree Dey
CBW - External Analyst
INDIA